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Market Commentary 13/04/17

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EUR/USD – Falling After Large Move Higher

Last night Donald Trump surprised the markets by saying the US Dollar was overvalued. Unsurprisingly this had a profound effect on all USD crosses, with big up and down-moves taking place in the hours during and after the news was released. On EUR/USD a large move higher occurred which pushed the market into the supply zone created by the drop out of the consolidation we saw last week. At the time the market moved into the zone I wasn’t sure if it was going to break through or not due to the size of the up-move created by the announcement, but today we have seen the market drop out of the zone and move back towards the source of the move higher.

I’m not sure if this drop has formed because the bank traders have got more sell trades placed inside the supply zone, or if it’s because they got buy trades placed to cause the move up to occur, and they’re just making the market fall to generate additional sell orders to use to get more buy trades placed. At the moment either scenario is just as likely, but I’ve got a feeling the banks have caused the up-move by getting buy trades placed, and that they’re going to get more placed when the market reached the area I’ve marked above the current low.

When the market enters this zone I want to see some kind of signal a reversal back to the upside is going to take place. Preferably I’d want to see a large bullish engulfing candle form, but a sharp move higher which consists of multiple bullish large range candles would also be an okay signal.

USD/JPY – Retracing After Drop

Trumps announcement last night put an end to the retracement we had seen form over the past few days and caused the price of USD/JPY to fall to new lows. Today we have seen the market enter a new retracement, but it’s looking likely that this one is also going to come to an end quite soon.

The market didn’t end up returning to the zone which I marked around the 110.000 level before dropping yesterday. It came close, but ended up reversing just before it was hit. The fact the market has dropped to new lows suggests that we are going to see more down -move occur tomorrow and next week. I can’t see any evidence which suggests the market is going to reverse from it’s current location, so for now the focus remains on looking for entries into short trades.

AUD/USD – Trump Announcement Leads To Sharp Move Higher

Similar to EUR/USD, Trumps announcement about the Dollar caused a significant move higher to take place last night on AUD/USD. The big difference between the two moves, is that the move we’ve seen on AUD/USD has been sustained today, whereas the move on EUR/USD has come to an end.

Because the move has been sustained, I think there’s a higher probability that we could see it continue next week, so long as no sharp down-moves end up taking place from the supply zone seen above the current market price tonight or tomorrow. If the market does move into the supply zone above the one it’s in now, a move down could terminate somewhere around the point where the swing into the zone originated from, so we’ll have to see how the market moves into this zone to gauge whether it’s worth trading or not.

Finding Supply & Demand Zones That Work!

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Why The Time It Takes For The Market To Return To A Supply Or Demand Zone Will Determine Weather The Zone Has A High Chance Of Causing A Reversal To Take Place

The Differences Between Zones Created By Bank Traders Taking Profits And Zones Created by The Bank Traders Placing Trades